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Why All Partners Must Carry Consequences for the Associated Risk Within the Supply Chain

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Submitted By mathijs
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Bloomberg: “Apple’s Reliance on Japan for Components Put Sales at Risk”
Why all partners must carry consequences for the associated risk within the Supply Chain

Author: Mathijs Cornelis van Itterzon

What are the consequences of a tsunami in Japan, with respect to the price of Apple stocks? If we ask a regular person this question, one may answer that it doesn’t have that much influence at all. Mainly because people have never heard of the company ShinEtsu, which is responsible for manufacturing thin silicon wafers for Apples products (Der Spiegel, 2011). What many people do not know is that when this Japanese manufacturer has been overwhelmed by a natural disaster risk of stock-out may appear and may harm other partners within the supply chain. One of the major customers is Foxconn in Taiwan which manufacturers Apple’s iPhone and iPad. Still we rely that Apple controls their supply chain well in order to produce sufficient iPhones for the market. Taiwan’s Foxconn is able to produce the iPhones and iPad due to the efficient and ‘justin-time’ delivery from the Japanese manufacturer. Natural disasters like the tsunami in Japan may disrupt the continuity in the supply chain with all the associated consequences. Risk management and mitigation strategies are suitable solutions, which may prevent a supply chain breakdown because one will get insight in high-risk situations, such as the situation in Japan and hence consider how to reduce the associated consequences (Chopra & Sodhi, Managing Risk to Avoid Supply Chain Breakdown, 2004). The current globalization of supply chains may have increased the efficiency but, however, comes at a price, which may increase other risks. So both parties profit from globalization, but what about the risks? Should Taiwanese and US manufacturing companies like Foxconn and Apple take an equal stake, with regards to the consequences,

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